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Tight budget deadline leaves no time for GOP feuds

Ohio
Published 4:30 p.m. ET June 19, 2015

Gov. John Kasich and statehouse Republicans have less than two weeks to come together on a budget agreement.(Photo: AP)

COLUMBUS – Republicans have no time for family feuds with less than two weeks left to pass a more than $71 billion plan to run state government.

Bickering among the GOP started early in the budget debate when Gov. John Kasich lost his temper with House Republicans for slashing his controversial tax plan, which included hikes on sales, tobacco and oil and gas taxes to help pay for a 23-percent income tax cut. On Wednesday, two Republican senators scolded school lobbyists — who prefer GOP state representatives’ funding proposal — for “losing touch with reality.”

But a tight deadline has made Republicans focus on compromises on tobacco taxes, school funding and accountability in Medicaid.

“We’re really not that far apart,” said Sen. Scott Oelslager, R-North Canton. He is one of six lawmakers — four Republicans and two Democrats — who have about a week to combine the House and Senate plans for funding schools, Medicaid and the rest of state government.

Money for schools

Talks about money for local school districts over the next two years will start with the Senate’s version, which provides more money to nearly 400 school districts than the House plan. However, urban districts, like Cincinnati City Schools, fared better under the House proposal.

“A majority of school districts in Ohio will receive more funding in the Senate plan in the next school year than the best other plan that has been presented,” said Sen. Cliff Hite, R-Findlay.

No school district would see a cut under either version, unlike Kasich’s initial proposal, which would have cut funding for more than half of districts in the state. Lawmakers are providing money to offset the phasing out of the tangible personal property tax for at least the next two years.

Still, the House plan provided that money through more one-time fixes. The Senate’s plan puts the extra money into the formula the state uses to determine how much money to give each school. Senate Republicans say this gives school treasurers more predictability in planning local budgets.

But House Republicans aren’t pleased with a Senate proposal to provide extra money to schools with higher graduation rates and higher achievement on the third-grade reading guarantee.

“Our focus is really on the impoverished areas,” said Rep. Ryan Smith, R-Bidwell, a lead budget negotiator.

Lawmakers also must decide on a standardized test for Ohio’s students or risk losing $750 million in federal funding. It’s not clear whether they will stick with the Partnership for Assessment of Readiness for College and Careers, or PARCC, whose exams were first used this year to test students on new Common Core education requirements.

“We’re going to have testing. It’s a matter of which test,” Smith said. Senate changes would make testing time shorter and conducted in one block of time instead of two.

Lawmakers instead decreased the income tax by 6.3 percent, bringing the tax for the wealthiest Ohioans to just under 5 percent. Neither party, in the House or the Senate, was interested in adding Kasich’s controversial tax increases back into the budget.

“There was a lot of agreement that we didn’t like the tax policy,” said Rep. Denise Driehaus, D-Clifton Heights, who will be in the negotiations.

House Republicans also have strongly opposed increases to oil and gas taxes. They stripped taxes on fracking from the budget, instead creating a task force to study the change and create a report by Oct. 1. Kasich told reporters in Lansing, Michigan, that any proposed increase shouldn’t be “puny.”

But Senate Republicans did add an extra income tax cut for about 1 million business owners. They wouldn’t have to pay income taxes on their first $250,000 in profits and would pay a 3-percent tax on income above that. Senators also added a 40-cent increase on a pack of cigarettes and increased taxes on other tobacco products to 22.5 percent.

Those changes meant Ohio’s top income earners would save about $10,000 under the Senate plan compared to $3,500 in the House version. Those making less than $20,000 a year would pay about $26 under the Senate plan and save about $2 under the House plan, according to an Institute on Taxation and Economic Policy study for progressive think tank Policy Matters Ohio.

House Republicans would prefer not to increase taxes, even on tobacco, but the hike is more appealing than a sales tax increase, Smith said.

The tax cut for business owners would likely stay in the final version of the budget, too.

“I would be surprised if anyone in the House would oppose our small business tax cut,” Oelslager said.

Medicaid accountability

Republicans agree that people receiving Medicaid should take more responsibility for their health care but disagree on how to do it. Both versions of the budget authorize Kasich’s plan to seek a waiver from the federal government to add health insurance premiums for better-off Medicaid recipients. Medicaid participants surveyed by The (Cincinnati) Enquirer this year generally said they could afford the premiums.

Senate Republicans also returned Medicaid money for breast and cervical cancer screenings and for pregnant women removed by Kasich’s budget. That money will likely remain in the final version.

What else?

• The Senate plan would give $130 million more to higher education than the House proposal, creating a large gap that lawmakers will have to bridge in upcoming negotiations. House Republicans were wary of that high level of funding.

Senate Republicans also proposed a two-year tuition freeze and asked universities to cut student costs by five percent.

• Senate Republicans ditched a ban on project labor agreements that establish the terms of construction projects, such as wages, benefits and strikes, before companies are hired. But House Republicans would like to add that back into the budget, Smith said.

• House Republicans were a little baffled by a Senate proposal to add 3,000 new gambling terminals to places with liquor licenses, Smith said. The expansion of gambling is a hot topic among representatives.

•An anti-abortion provision that would create a 60-day deadline for the state health department to rule on abortion clinic licensing exceptions remains in the budget. Another proposal, to require abortion providers’ partner hospitals to be within 30 miles, was removed at the request of Sen. Sandra Williams, D-Cleveland, who then voted in favor of the two-year budget. Democratic negotiators will try to remove the anti-abortion language, but they are outnumbered.

A committee of lawmakers has about a week to merge the two budgets before sending the final draft to Gov. John Kasich. The deadline to sign the budget is June 30.